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Reply #26: US economy: Dollar vs pound pulls in the crowds (to sell US dollar short) [View All]

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UpInArms Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-07-07 07:59 AM
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26. US economy: Dollar vs pound pulls in the crowds (to sell US dollar short)
http://news.yahoo.com/s/ft/20071207/bs_ft/fto1207200700...

Profiting from falling asset prices is one of the principal attractions of spread betting. So it is little surprise that investors have been quick to take advantage of the weakening dollar and stalling US economy by going short.

There is also little doubt that there will be some type of downturn in the US. The Federal Reserve cut interest rates at the beginning of last month, warning that the pace of economic expansion was set to slow. House prices have been weak and many of the large banks have been hit by the subprime mortgage crisis.

But while shareholders and property owners grow increasingly nervous, spread betters are diving into the market to profit from the negative sentiment.

Those who believe the US is on the brink of a recession are taking short positions - betting on the price going down - in indices, individual stocks, currency and interest rate futures. At the same time many are going long on assets considered safe havens from economic weakness, such as commodities - especially gold, defensive stocks and Treasury bonds.

"If markets are volatile, and if people think there might be a recession, there are still plenty of opportunities for spread betters," says Paul Howard, corporate development manager at TD Waterhouse.

Betting providers have seen huge volumes of bets placed on the sterling/dollar, which has seen considerable movement over the last couple of months. Investors can also short the dollar index - a basket of currencies versus the dollar.

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